Higher Minimum Wages, More Crime?

The Democratic Party Platform calls for a $15 federal minimum wage, and many attendees at last week’s Democratic National Convention extolled its benefits. In endorsing presidential nominee Hillary Clinton, Senator Bernie Sanders praised her for “understand[ing] that we must raise the minimum wage to a living wage.”

But none mentioned its consequences. One consequences that is particularly relevant to convention-goers is the link between minimum wage increases and crime. In Philadelphia, where the convention was held, homicides were up 10% at the start of July (relative to 2015). The problem is by no means isolated: Homicide rates are up 15% in 51 large US cities so far this year.

“In the heart of North Philadelphia—represented by ZIP Codes 19121, 19122, 19132 and 19133—the unemployment rate for teenagers averages 42%, according to 2014 data (the most recent available) from the Census Bureau’s American Community Survey. … The city’s north side faces these crisis-level rates of youth joblessness with a starting wage—$7.25 an hour—that’s consistent with the historical inflation-adjusted average minimum wage in the U.S. of $7.40. If anything, the current minimum wage is too high, given the large numbers of unemployed youths who can’t find a job. The consequences of more than doubling it to $15 an hour would be disastrous.

By significantly reducing the available stock of job opportunities at the bottom end of the career ladder, a higher minimum wage increases the likelihood that unemployed teens will seek income elsewhere.”

A 2013 study by Boston College economists found that “low-skilled workers affected by minimum-wage hikes were more likely to lose their jobs, become idle, and commit crime.” The authors of the study emphasized the “dangers both to the individual and to society from policies that restrict that already limited employment options of this group.”

This study serves as a scary reminder that the consequences of raising the minimum wage extend far beyond employment statistics.